The five-year Treasury
bond was over subscribed thrice today but the central bank accepted 25bn/-,the
announced tender amount.
The Bank of
Tanzania (BoT) wanted to rise 25bn/- instead bidders offered 79.2bn/- for the bond
which its weighted yield rate to maturity is 17.05 per cent with coupon rate of
12.37 per cent.
Bankers had predicted
the over subscription on the back of easing money circulation in the market—that
have seen overnight rates dropping to the lowest level in six months since last
August.
“It remains to be
seen as a positive sentiment,” Standard Chartered Bank said Tuesday in its Daily Market statement, “we expect over
subscription and cut-off at 18 per cent.”
The banks
prediction is based on the fact that most trading books will be targeting the
bond to add on some risk.
Earlier,
BoT, cut by over 50 per cent the size of the bond to
25bn/- from 40bn/-. BoT gave no reasons for reduction of the size. However,
analysts said it was due to tight liquidity in the market.
The central bank
canceled two auctions of five-year bonds late last year due to disagreement
with bids offered from investors who wanted high yields to avert the inflation
risks. The inflation, stands at 19.8 per cent as at end of December.
Sources: tzexchange.blogspot.com
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